Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

by Reid Hoffman

If you get in early and start getting that feedback and your competitors don’t, then you’re on the path to success.

two-sided business models, where you have two user groups that create positive network effects for each other.

The window for action can be tiny and it can close quickly.

Brian turned to one of his favorite decision-making techniques: reaching out to the world’s leading experts.

“Don’t buy them,” he said. “The best product will win.”

Blitzscaling drives “lightning” growth by prioritizing speed over efficiency, even in an environment of uncertainty. It’s a set of specific strategies and tactics that allowed

strategy of blitzscaling: a set of techniques that allows both start-ups and established companies to build dominant, world-leading businesses in record time.

Network effects generate a positive feedback loop that can allow the first product or service that taps into those effects to build an unassailable competitive advantage.

First prize in the first wave of consumer social networking went to Facebook; second prize to MySpace; third prize to Friendster. Remember Friendster? You need to win first prize in order to survive in the Internet era.

The level of competition can seem overwhelming at times, but the Networked Age also allows companies to reap incredible rewards much more rapidly than at any other point in history.

allows your company to grow at a furious pace that knocks the competition out of the water.

purposefully and intentionally doing things that don’t make sense according to traditional business thinking. In the Blitzscaling Era, you have to make a tough call:

It’s good to keep in mind that those who extoll the virtues of disruption tend to be—coincidentally enough—the ones in the winners’ circle. But disruption that spreads its benefits and new opportunities broadly is better for society.

People should be part of building the future rather than feeling like the future is being forced upon them.

codified a series of tactics and choices that made it work. The result was a specific set of principles that describes how to grow multibillion-dollar companies in a handful of years.

Need to do this with own experience

the one thing they all had in common was an extreme, unwieldy, risky, inefficient, do-or-die approach to growth.

Silicon Valley insiders and well-read outsiders believe that the key is the combination of talent, capital, and entrepreneurial culture that makes it easy to start new companies. This too is wrong.

The term “blitzscaling” derives from the twentieth-century usage of “blitz” as a way of describing a sudden, all-out effort.

“blitzkrieg” (“lightning war”) strategy that General Heinz Guderian devised for the initial military campaigns of Nazi Germany during World War II.

Instead they fully committed to an offensive strategy that accepted the possibility of running out of fuel, provisions, and ammunition, risking potentially disastrous defeat in order to maximize speed and surprise.

blitzscaling strives for a relentless and dizzying speed that overwhelms the market.

“It’s like harpooning a whale. The good news is, you’ve harpooned a whale. And the bad news is, you’ve harpooned a whale!”

When a market is up for grabs, the risk isn’t inefficiency—the risk is playing it too safe. If you win, efficiency isn’t that important; if you lose, efficiency is completely irrelevant.

When you blitzscale, you deliberately make decisions and commit to them even though your confidence level is substantially lower than 100 percent.

You accept the risk of making the wrong decision and willingly pay the cost of significant operating inefficiencies in exchange for the ability to move faster.

To mitigate the downside of the risks you take, you should try to focus them—line them up with a small number of hypotheses about how your business will develop so that you can more easily understand and monitor what drives your success or failure.

finance intelligent risks with both financial capital and human capital,

Think of them as fuel and oxygen; you need both to propel the rocket skyward.

blitzscaling is prioritizing speed over efficiency in the face of uncertainty.

product/market fit: your product satisfies a strong market demand for the solution to a specific problem or need.

about assembling that plane faster, then strapping on and igniting a set of jet engines (and possibly their afterburners) while you’re still building the wings. It’s “do or die,” with either success or death occurring in a remarkably short time.

achieve critical mass and/or market dominance ahead of the competition, then relaxes down to fastscaling as the business matures, and finally downshifts to classic scale-up growth when the company is an established industry leader.

Blitzscaling requires you to move at a pace that is almost certainly uncomfortable for your team.

investors generally prefer to back market leaders.

Because they’re focused on responding to your moves, which can often take them by surprise and force them to play catch-up,

High-growth companies offer a return to shareholders five times greater than medium-growth companies.

growth was greater than 60 percent when they reached $100 million in revenues—were eight times more likely to reach $1 billion in revenues than those growing less than 20 percent.

Once a scale-up occupies the high ground in its ecosystem, the networks around it recognize its leadership, and both talent and capital flood in.

By attracting the best people, scale-ups increase their ability to build and bring to market great products, which in turn increases their ability to rapidly scale.

confidence interval they have in their investment thesis. Achieving scale shrinks those intervals and makes it easier to decide to invest. And because the network that connects investors—especially within a tight-knit ecosystem like Silicon Valley—can disseminate this information quickly and broadly,

“We got to a point where it was taking us more time to go back and fix the bugs and issues that we’re creating than the speed that we were gaining by going faster.”

Successful blitzscaling means that you’re maintaining at least some level of control by rapidly fixing the things that will inevitably get broken so that the company can maintain its furious pace without flaming out or collapsing in on itself.

Uber and Airbnb also built large businesses at incredible speed based on novel business models rather than unprecedented new technologies.

These innovations reduced the friction for both driver and rider, making Uber’s core UberX ridesharing model a mass-market possibility for the first time.

Each and every one of the technology companies worth over $100 billion has used technology leadership to reinforce its competitive advantages.

Technology innovation is a key factor in retaining the gains produced by business model innovation.

The key is to combine new technologies with effective distribution to potential customers, a scalable and high-margin revenue model, and an approach that allows you to serve those customers given your probable resource constraints.

Ideally, you design your business model innovation before you start your company.

when in fact they have the goal and the wish for extreme growth but no understanding of an actual strategy that will get them there.

By paying out more than it takes in on those early trips, Uber is able to reach critical scale faster than a more conservative competitor.